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At the heart of Cyrus Mistry’s legal battle with Tata Sons Ltd after his ouster as chairman is his family’s stake in the holding company of India’s largest conglomerate. Until now, it was said the Mistrys acquired the shares in about five decades starting early 1920s. That, it turns out, is not entirely true.
The submission by Tata Sons pertains to a letter addressed to the senior associate editor of Businessworld magazine on 3 Sept 2003, by Shapoorji Pallonji & Co. Ltd.— also shared with Ratan Tata at the time — clarifying how the Mistrys came to hold a stake in group parent.
Until now, there was no formal account of how the Mistry family came to be a shareholder in Tata Sons. A Tata Group insider had told BloombergQuint earlier that the story dates back to 1924. Sir Dorabji Tata, a descendant of Jamsetji Tata, and his cousin Ratanji Dadabhoy Tata were running what was then known as Tata & Sons. The business was facing financial difficulties and a friend came to the rescue.
Shapoorji Pallonji Mistry, the grandfather of Cyrus Mistry, was a close friend of Dinshaw. Shapoorji had become Bombay’s leading realtor by the 1930s. In 1936, when Dinshaw died, his estate was divided between two entities. The land went to a private trust, FE Dinshaw Estate, which is now administered by Nusli Wadia, and Dinshaw’s company was acquired by Shapoorji.
The letter to the news magazine, which was submitted before the NCLT, refutes Dinshaw’s involvement in the Shapoorji group’s stake purchase.
Instead, the majority of the Mistry family’s stake in Tata Sons was acquired from three siblings of Jehangir Ratanji Dadabhoy Tata, or JRD Tata.
By the end of the 1970s, the Mistrys had acquired close to 17.5 percent stake in the company. By March 2016, this had inched up to 18.38 percent.
According to the documentary evidence submitted at the NCLT, in June 1965, Shapoorji group bought some shares of Tata Sons from Lady Petit (Sylla) at the request of her brother JRD Tata.
In 1970, the Mistry family bought shares from JRD Tata’s other sister Rodabeh Sawhny with his approval. In 1974, Darab RD Tata (JRD Tata’s brother) approached Mistry to sell his stake in Tata Sons.
The Shapoorji group letter says JRD Tata was upset with the last transaction as the Mistry family stake increased in Tata Sons. But the matter was resolved. According to the minutes of a board meeting of 6 June 1980 – also part of the Tata Sons’ submissions before the NCLT – JRD informed the board that earlier he had a quarrel with Pallonji Mistry, father of Cyrus Mistry, the reasons for which were not disclosed. But this was later settled and JRD invited Mistry on the board of Tata Sons at the June meeting.
JRD Tata asked Pallonji Mistry to consider a voluntary undertaking that in the event of sale of his two investment arms which also held Tata Sons stake, Sterling Investments and Cyrus Investments, Tata Sons shares would be excluded and offered back to the Tatas. “He did not show any positive response, but at least said he would consider the matter,” the board minutes said quoting JRD Tata.
(This article was originally published on BloombergQuint and has been republished with permission.)
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